The Customer Institute is a website designed to provide answers to the most important questions for every business; namely, how is my customer asset doing? Is it getting better or worse? How can I improve it.
This site will be the repository of customer data gathered from sources worldwide.

Wednesday, December 31, 2014

Many companies are looking for ways to delight the customer
or provide the customer with a ”WOW” experience.There are many marketing research
organizations that provide all sorts of metrics to demonstrate how the customer
experience is improving. There are companies that believe in creating
strategies on the basis of improving the customer experience and is one of the
best strategies they could have to improve their business performance. Is it
possible they could all be wrong?

In a survey of nearly 100,000 US consumers who participated
in online interaction with a business, the researchers Matt Dixon, Nick Toman
and Rick DeLisi found “there is virtually no difference at all between the
loyalty of those customers whose expectations are exceeded, and those whose
expectations are simply met”.They go on
to note that there is virtually no statistical relationship between how a
customer rated a company on a satisfaction survey and their future customer
loyalty. From a statistical perspective the survey found that the correlation
coefficient was just slightly greater than 0.3, which when translated suggests
that there's only about a 10% information transfer between satisfaction and
loyalty. That means 90% of the information that causes loyalty to change occurs
from areas other than customer satisfaction.

The Customer Institute continues to focus on dissatisfaction
as a key driver of loyalty/disloyalty. Satisfaction may aid in the development
of loyalty but dissatisfaction has been shown to be one of the greatest drivers
for disloyalty. As an example, cleanliness of a restroom in a fast food
establishment will be a strong dissatisfier that will have more influence than
features, such as the quality of the food or the speed of service.

Since dissatisfaction is such a dominant factor in the
customer relationship, the obvious conclusion is that the best customer
experience would occur when all the elements that create dissatisfaction are
eliminated.The study noted above suggests
that a customer service interaction is roughly 4 times more likely to drive
disloyalty then to drive loyalty.

The bottom line is that the most important aspect of
customer loyalty is the absence of actions that create dissatisfaction. Another way of stating this is the adage “customers
may stay when satisfied but will surely leave if dissatisfied. “The
statistics prove it!

Tuesday, December 30, 2014

Customer loyalty is not always based on rational thinking.
Customers often make decisions based on feelings and emotions. Psychologist
Joel Weinberger, an expert in unconscious processes, is also the founder of
Implicit Strategies, a consulting firm. Some of their research indicates that when you
ask customers such as "Why are you loyal to the store", you may not always get an honest
answer. The customers are not lying but may not be aware of some of the
psychological aspects that drive their loyalty.

Weinberger suggests that loyalty can be increased when a
business creates a caring relationship with its customers, which is based on a
mutual basis of obligations to take advantage of the possible effects of unconscious implications of the contact. The company needs to treat its
customers with respect, fairness and consistency. Similarly the customer on the other
hand, needs to be respectful to the company.

Weinberger suggests that unconscious motivations often drive
loyalty. While this is a relatively new idea, some of the research being done in
behavioral psychology and neuroscience suggest that we often times make
decisions based on feelings and emotions. There are two implications regarding loyalty that come
out of this research regarding decisions based on feelings and emotions;
namely,

1.First impressions by customers may find one
quality appealing and customers will use that impression to extend to other qualities not
connected with the initial impression. An emotional aspect of this first
impression is that if a customer has a positive predisposition of the brand, then we
tend to have a positive predisposition to everything else associated with.

2.Customers often place more weight on the first
piece of information they receive than information contained in a later point
in time. Quoting Weinberger “in everything you learn about someone or something
is filtered through the first impression". Hence, all aspects of the product or service will bedirectly influenced by the first contact.

The bottom line is that there are a few steps every business
should take to accommodate these feelings and emotions of custoemrs that arise from the first contact/impression.

The first obvious step
is to go out of your way to offer the best possible deal to first-time
customers. You want to make sure that your first impression sets the
perspective that you are a good company to do business with.

The second obvious
step is to make sure that your customers know you and are familiar with you.

With that second step, and the third step, which is to make sure that you and your personnel are familiar with your
customers; namely, build a relationship with each one.

One caveat to remember
is the fact that the best deal you offer to first-time customer should be one
that you can live with on an ongoing basis. Don't price yourself out of
business.

The old adage that the first impression counts has been verified by the psychological research.

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DESIGNER: Need to create a new survey? Design a survey that is “built to last” that addresses specific needs and overall business strategy. Your survey should be able to identify the satisfiers and dissatisfiers.

CONSULTANT: Not sure if your survey integrates with your customer strategy? Have an expert look into how well the survey system supports your overall business strategy.